CDLENGULFING (CDLENGULFING)

CDLENGULFING (Engulfing Pattern) is a powerful two-candle reversal pattern. For bullish engulfing: First candle is bearish (typically during a downtrend). Second candle is bullish and completely engulfs the first candle's body - it opens below the first candle's close and closes above the first candle's open. The second candle's body is larger and completely contains the first. For bearish engulfing: First candle is bullish, second is bearish and engulfs it completely. The pattern shows a dramatic shift in sentiment where the new direction not only reverses the previous session but completely overwhelms it, demonstrating strong conviction. Shadows don't need to be engulfed - only the bodies matter.

Engulfing patterns are among the most reliable and popular reversal patterns in cryptocurrency trading due to their clear visual appearance and strong statistical reliability. Bullish engulfs signal trend reversals at bottoms - enter long when the engulfing candle closes, or wait for a minor pullback for better risk-reward. Bearish engulfs at tops signal distribution - enter shorts on close or after next candle confirms. The larger the engulfing candle relative to the first, the more powerful the signal. Most effective at significant support/resistance levels, after extended trends, or at psychological price points. Very common in volatile crypto markets, making them practical for regular trading. Combine with volume confirmation (engulfing candle should have higher volume), RSI at extremes, MACD crossovers, and price structure. Engulfing patterns are foundational patterns taught in every candlestick analysis course and widely recognized by traders.